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Company restructuring in EU made easier

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Company restructuring in EU made easier

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(BRUSSELS) - The EU Council adopted Monday a Directive on cross-border conversions, mergers and divisions providing harmonised procedures for companies to merge, divide or move within the EU Single Market.

"These new rules enable EU companies to make the best out of the single market so that they remain competitive globally," said Finland's justice minister Anna-Maja Henriksson, for the EU presidency: "At the same time, the directive provides for appropriate safeguards that discourage abuses and protect the legitimate interests of workers, minority shareholders and creditors."

The adoption was also welcomed by the Commission: "The new rules will give EU businesses more opportunities to move and grow by providing clear procedures for companies, which will cut costs and save time," said Justice Commissioner Vera Jourova. "At the same time, there will be strong safeguards to protect employees' rights and to prevent abuse."

The new rules introduce comprehensive procedures for cross-border conversions and divisions and provide for additional rules on cross-border mergers of limited liability companies established in an EU member state. They also offer further simplifications that will apply to all three operations. These include the possibility of speeding up the procedure by waiving reports for members and employees in the event that shareholders agree, or if the company or any of its subsidiaries do not have any employees."

According to figures made available by the Commission, there are around 24 million companies in the EU, of which approximately 80% are limited liability companies. Around 98-99% of these limited liability companies are small and medium-sized enterprises. The latter will be the primary beneficiaries of the considerable savings generated through this directive."

The directive sets out procedures to check the legality of cross-border operations against the relevant national legislation and introduces a mandatory anti-abuse control procedure. The procedure will allow national authorities to block a cross-border operation when it is carried out for abusive or fraudulent purposes, i.e. when it is designed to evade or circumvent national or EU law, or is intended for criminal purposes."

The agreed text provides for similar rules on employee participation rights in cross-border conversions, mergers and divisions. It also ensures that employees will be adequately informed and consulted about the expected impact of the operation. Minority and non-voting shareholders' rights will enjoy greater protection. At the same time, creditors of the company concerned are granted clearer and more reliable safeguards."

Finally, the directive encourages the use of digital tools throughout the cross border operation. It will be possible to complete formalities such as the issuance of the pre-operation certificate, online. All relevant information will be exchanged through existing, digitally interconnected, business registers."

The directive is set to enter into force 20 days after its publication in the Official Journal of the EU. Member states will then have 36 months to adopt the measures necessary for its implementation."

Full text of the directive

EU rules in Company Law and Corporate Governance


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